Abstract:
Credit risk has shown to be one of the main forms of risks financial institutions are
exposed to due to the very nature of their business operations. The study investigated
how rural and community banks managed their credit risk in Ghana. Accordingly, the
main objectives of the study were to determine the main sources of credit risks rural and
community banks are exposed to in Ghana, to identify the credit risk management
practices of rural and community banks in Ghana, to assess the rural and community
banks credit risk management policies as against Bank of Ghana credit risk policy and
finally to analyze the constraints to managing risks by rural banks. The target population
for the study constituted all the rural and community banks in Ghana and specifically the
study sample came from rural banks who operated in the Ashanti region; Amensie-West
Rural Bank, Atwima Mponua Rural Bank, Sekyere Rural and Atwima Kwanwoma Rural
Bank. Since the study was employed cross sectional research design, the study used
questionnaires as the data collection instrument. The questionnaire had three parts. The
first part of the questionnaires dealt with the demographic characteristics of the study
respondents. The second section dealt with the main sources of credit risk that rural banks
were exposed to. The third and final section looked at the credit management practices
the credit management, credit risk management policy and the constraints to credit risk
management. It became evident that the key credit risk sources that most rural were
exposed to in their operations were corporate, individual and SMEs commercial loans.
Also it was established that most of these banks did not used or have in place independent
bodies to review their organization credit decisions and policies. On this score it was
recommended that management of these banks should employ the services of external
bodies who will have the capacity and competencies to assess their organization’s credit
decision and policies to ascertain how robust it is in mitigating their organization
operations against potential credit risk sources.
Description:
A Dissertation in the Department of Accounting Education, Faculty of Business
Education, submitted to the School of Graduate Studies, University of Education,
Winneba in partial fulfilment of the requirements for award of the Master of
Business Administration (Accounting) Degree.
AUGUST, 2017